April 10 | Sale | 60 | 5,000 | 300,000 | April 19 | Sale | 30 | 5,000 | 150,000 | April 28 | Purchase | 100 | 2,200 | 220,000 | Required: 1. Record the inventory, purchases and cost of goods sold in a Perpetual Inventory record using the FIFO method. 2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold account. Assume that all sales were on account. 3. Determine the gross profit from sales for
Words: 366 - Pages: 2
1. Arguments for and against LFO abolition in the US a) What are the arguments in favour of retaining LIFO? The arguments are being made on a number of different grounds so be clear to separate these out. b) What are the arguments in favour of the US abolishing LIFO? c) Should decisions on matters such as this be made on the basis of what is the most appropriate from an accounting perspective (i.e. principles) or from the perspective of the impact of the decision on the real economy (i
Words: 947 - Pages: 4
Generally Accepted Accounting Principles (GAAP) are: 1. Specific Identification Method 2. First-in, First-out (FIFO) 3. Last-in, First-out (LIFO) 4. Average Cost Method Each affects the valuation of inventory and the cost of goods differently. Specific identification method, although the most accurate method, it is not practical for large volume inventories that are of similar products. FIFO is a cash flow assumption that assumes earlier goods purchased by a company are the first ones to be sold
Words: 390 - Pages: 2
However there are several treatments upon which they differ. When it comes to the treatment of inventory US GAAP allows for both the FIFO and LIFO methods to be used provided that they are accounted for consistently or provide sufficient reason for change. IFRS however strictly prohibits the use of LIFO and only recognizes the accounting for cost of goods sold on the FIFO or weighted average cost basis. This really is a very big stumbling block on the path to convergence because of the immense tax advantages
Words: 327 - Pages: 2
that would result if the company used FIFO rather than LIFO. The company uses the periodic method. FIFO: $1,410 150 units multiplied by $8 equals $1,200 30 units multiplied by $7 equals $210 $1,200 plus $210 equals $1,410 LIFO: $1,160 100 units multiplied by $6 equals $600 80 units multiplied by $7 equals $560 $600 plus $560 equals to $1,160 Therefore, the phantom profit would be $250 if the company were to use the FIFO rather than LIFO. Question 4. Compute the lower of cost
Words: 259 - Pages: 2
Debits, Credits, and Inventory Costs Part 1: Double-Accounting Method of Recording When using the double-accounting system, also known as the double-entry method, each transaction on the General Journal and associated account activity catalog must be recorded at least into two accounts. The debit account, often on the left, is denoted by ‘Dr’ while the credit account, often on the right side, is denoted by ‘Cr’. The entries are made depending on the account type, which
Words: 1061 - Pages: 5
Standard-Based Decision Making Courteney Alderman ETH/376 March 23, 2015 Juanita Davis Audit Opinions When performing an audit there are four different types of audit opinions that Green and Associates can provide when the audit has been finished. They can provide an unqualified, unqualified with explanatory paragraph, qualified, and an adverse opinion. * Unqualified opinion- An auditor can give an unqualified opinion when it comes to a company’s financial statements when the financials
Words: 777 - Pages: 4
Capella University MBA 6014 Financial Accounting Professor Laurent Bobda Introduction Net income results, reported in the financial statement presentation, can be affected by the inventory reporting methods used. First-In, First-Out (FIFO), Last-In, First-Out (LIFO,) and weighted average methods each have their own implications during periods of inflation and deflation. This paper is designed to analyze and discuss the Generally Accepted Accounting Practices (GAAP) and ethical implications of each
Words: 788 - Pages: 4
End of LIFO Jordan Stepney 9910 Pineville Rd Apt 205 Raleigh, NC 27617 Jordanjay15@yahoo.com 919-770-0972 ACCT525 Current Acct Issues Professor Sharon Brown 08/14/2016 Introduction An interesting topic that I chose is LIFO accounting. LIFO stands for last in and first out. LIFO is a valuation method of inventory. The other valuation methods of inventory is FIFO, which stands for first in and first out and weighted average. FIFO is a popular valuation method along with LIFO.
Words: 687 - Pages: 3
The uncertain future of LIFO* The uncertain future of LIFO This paper was authored by Christine Turgeon, a partner; Scott Rabinowitz, a director; Helen Poplock, a director; and Sean Pheils, a senior associate with PricewaterhouseCoopers’ Washington National Tax Services (WNTS) practice. For over 70 years, US taxpayers have been able to value the cost of their inventories using the last-in, first-out inventory method of accounting (LIFO). In general, to use LIFO for federal income tax purposes
Words: 2967 - Pages: 12
